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tv   Nightly Business Report  PBS  July 4, 2012 7:00pm-7:30pm EDT

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>> this is n.b.r. >> susie: good evening, everyone. i'm susie gharib. the markets are closed for independence day. tonight, we look at the business of the foodie craze. whether it's home cooking or eating out, americans love to eat. >> tom: i'm tom hudson. we talk with the c.e.o. of spice company mccormick about what it means to be a foodie and how important they are to developing new flavors and new business. >> susie: and with start-up costs far cheaper than traditional restaurants, food trucks are driving the industry's latest craze. >> tom: that and more tonight on "n.b.r." "nightly business report" is brought to you by: captioning sponsored by wpbt
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>> tom: food is big business in america. from cooking at home to fine dining and even food trucks, we have a big appetite, and that means big money. susie, as a nation, we spend an estimate $1.3 trillion a year on food and the industries surrounding it. >> susie: but tom, technology is transforming how we decide what to eat. blogs, web sites and apps dedicated to eating have made the business of food more competitive. erika miller kicks off our look at the foodie craze, reporting on how both new and old media are changing the way we eat. >> food is something that is to be shared. it is used in celebrations, in life, in love, in death, in rituals, in religious
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ceremonies. >> reporter: so, it's natural that many people are passionate about what they eat and where they eat it. thanks to technology, there have been big changes in how we share our meals. >> you go on the internet, you search yelp, or maybe you are walking outside and you say, "what's good to eat nearby?" then you go to an open table, you make a reservation, you email your friends to tell them, "hey, meet me there." you get there, one friend is sort of checking in on foursquare; the other is sort of tweeting about your get- together. >> reporter: restaurants know this and are doing whatever they can to make social media work to their advantage. there are 580,000 restaurants in the u.s., a number that's been falling the past few years. the hardest hit have been independent mom-and-pop restaurants. for them, especially, customer reviews on sites like yelp have a direct impact on the bottom line. >> positive reviews on yelp are
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positively correlated to restaurant sales. so i think it's helpful for restaurants to get user- generated content and people to favorably review their restaurant on yelp and on opentable, as well. >> reporter: of course, food magazines haven't gone away. many people still enjoy reading restaurant reviews in newspapers. but advertising revenues for food magazines fell over 16% last year on top of a 17% drop the prior year. both represent the biggest declines of any category. >> if i'm a publication and i'm only going to print once a week or once a month, then the data on the reviews is a lot more stale than last night or today's review on a user-generated content standpoint. >> reporter: one new trend in the foodie craze is ultra- personalization. there are now web sites, blogs and apps dedicated to everything from bacon to vegan-friendly food trucks. erika miller, "n.b.r.," new york. >> susie: when you think food, one name that comes to mind is
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"food and wine" magazine. joining us now: the publisher of the popular magazine, christina grdovic. christina, thanks so much for joining us. what do you think is driving this foodie craze? >> well, i think it's... well, first of all, happy fourth of july. i think it's a lot of things. we have been editing a magazine for now over 34 years, and we've been in the event business for 30 years, and we've been celebrating chefs for years and years and years, but they're on tv now. the food network has done a spectacular job of making a lot of these chefs celebrities, so it's opened it up to a lot more people. >> susie: and to what extent do you think it has to do with the economy, that people are eating out maybe less, cooking more at home. do you think that's made people pay more attention to food? >> i think... we think so. you know, during a recession, i think it's really common for people to spend more time with their family and their friends in what they call "nesting."
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so what we do a lot of in the magazine, even though you might be cutting back on certain things, you don't want to cut back on your family and friends, so you serve really good meals and really good wines, and that doesn't necessarily mean the most expensive wines and the most expensive ingredients. it just means really good ingredients and really we do a lot of value wines. so i think it's about creating this food and wine lifestyle. >> now, as you mentioned. "food and wine" magazine has been around for a really long time, more than 30 years, but now it's becoming a very crowded field. to what extent is it helping or hurting your business now that there are blog and tv programs and, you know, so many other magazines and web sites that are out there? >> we think that it helps our category. it brings more people to the category. you know, there's constantly more and more people that you hear about that are just being introduced to certain chefs or foods or wines or beers. so there's so many people still to reach. and we're part of that crowd,
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because in addition to having magazine, we're also, like everybody, we have a web site. we have an ipad app. we have iphone apps. we have news letters. we want to be everywhere everyone is also. >> just to wrap it up, is this a phase that will fizzle out, or is this a long-term trend that's here to say? >> there's in way it can be a fad. i never met anyone who started eating great food or discovering wine and then said, i'm not interested in this anymore. i think several years ago the cupcake was a fad, but cupcakes are still around. hamburgers were fad, but hamburgers are still around. so i don't think the fried chicken and meatball fad is going to go away either. >> >> susie: all right. we all love our food. thank you so much, christina, "food & wine" publisher christina grdovic. >> tom: americans spend more than $600 billion a year eating out, a figure that has been increasing despite an uncertain economy. dining out has become almost a
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national past time. diners are savyier and are not shy to share their experiences with others. as diane eastabrook tells us, that's providing opportunities and challenges for restaurants. >> reporter: on a sweltering chicago weekday, the vibe inside hub 51 is hotter than the temperature outside. the loft-style restaurant in the city's trendy river north neighborhood is packed with hungry urban professionals. >> hub was everything we wanted to eat under one roof. we were going out for a burger some nights, we were going out for sushi some nights. >> reporter: 29-year-old jerrod melman and his 33-year-old brother r.j. opened hub 51 four years ago. they launched paris club last year and are partners in three other eateries. >> you go into a clothing store and you say, "wow, that might make a great uniform someday," even if it's not applicable for that, or a design within a museum. you see things all the time that kind of connects the dots to making a restaurant. >> reporter: the melmans grew up in restaurants.
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their father, richard, founded lettuce entertain you enterprises 41 years ago. the company operates and licenses 80 restaurants in eight states, including magianno's italian kitchen, shaw's crabhouse and l woods. melman says for him and his sons, opening a restaurant today is more challenging than it was in 1971. the competition is tougher, the regulations are tougher and the customers are tougher. >> i think they've traveled more, they've tried more, they've eaten many different places, they know their rights. i think it's terrific. i think it's pushed restaurateurs to be better. >> reporter: when the melmans open a restaurant, food comes first. they design the menu then build a theme around it. the big driver for success is word of mouth, and today word travels faster than ever. with web sites like yelp, grubstreet and chowhound, you can find just about any restaurant and read a customer review of it. positive reviews can potentially
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grow business; negative ones can potentially kill it. there's also influence from more traditional media. restaurant review show "check, please!" airs on pbs stations in six cities. diners dish about their favorite haunts. >> the cheesecake in the little mason jar. >> there's something called the "check, please!" effect, and when the restaurants are on the air, i think people have an inherent trust in our brand. so when we feature a restaurant, we really drive a lot of traffic. >> reporter: veteran restaurant consultant ronald paul agrees consumers have more power than ever and smart restaurateurs find ways to harness that power. >> the overall experience has become, "we know what good food is, we know what things should look like. presentation is more important than ever. we don't want adequate, we want something better." >> reporter: the melmans, father and sons, think more engaged customers have made the
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restaurant industry better, and made them better restaurateurs. >> i think if it's genuine, hopefully generally it will connect. we find our places to be pretty authentic. >> reporter: diane eastabrook, "n.b.r.," chicago. >> susie: still ahead, we go all american with barbecue for tonight's "made in america" as one california chain tells us the secret really is in the sauce. >> tom: the latest taste crazes don't just happen, they are invented-- often in the kitchens and labs of companies like mccormick. that red tea smoked sea bass you tried at that hot new restaurant? the chef may have gotten the idea from mccormick's flavor forecast. darren gersh talked with alan wilson, c.e.o. of the spice giant, to find out how a company that is more than 100 years old has become a flavor innovator. >> reporter: what makes someone a foodie? >> i think it's open to different kinds of flavors and experiences and... and... and really seeking that... that intensity that you get from...
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from... from different flavors. >> reporter: so, the traditional view that americans, you know, won't try anything new, you know, that they want ketchup and mustard, is that antique? is that gone? >> there's a growing number of people probably driven by things like the food networks and... and cooking shows there that people really are willing to experiment and... and try new things >> reporter: what percentage of people are foodies, and are they... like anything, it's, you know, 10% of your customers drive 90% of your innovations and... and new business? >> our gourmet line, which, there-- which, really, is what appeals to... to foodies-- is about 10% of volume. >> reporter: so foodies are notoriously fickle folk. how do you... how do you keep developing something that's going to keep them... that's going to whet their appetite, as it were? >> in a normal year, we will introduce about 100 new... new units, new products... >> reporter: uh-huh. >> ...around the world. this year, in 2011 and in 2012,
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we'll have over 200 and... and part of that is just keeping the line fresh and capturing those trends. >> reporter: so, just looking ahead this year, what are some of the... what are some of the up-and-comers? what will we be looking for in our pots? >> i think it's an... an... an... expansion of... of something we did in the flavor forecast in 2008, is alcohol- based flavors. so, we introduced a brown sugar bourbon last year which has become one of our top-selling "grill mates" items. this year, we introduced a brandy and herb, which... which is also a great flavor. and so, i... i think that trend is going to continue. >> reporter: coming up with a spice like... like garam masala? how... how much can that do for your business? >> we generate about a third of our growth from products, from new products. so, if we're trying to grow 4% to 6% a year, we expect 2% of that to come from new products. and we've been pretty consistent in doing that. >> reporter: well, alan wilson, c.e.o. of mccormick, thank you for your time.
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>> thank you. >> susie: from restaurants to buying groceries and making lunches, americans spend over $1 trillion a year on food. before the great recession hit, a lot of that money went to eating out, but that's changed. celebrity chefs like emeril lagasse and paula dean are helping make chefs out of everyday americans. and as diane eastabrook reports, that's turning the housewares industry into a multibillion- dollar business. >> okay, so push up, pull back in same motion. >> reporter: chef carrie bradley demonstrates the proper way to separate an egg and whip the whites for a perfect strawberry almond cake. the chopping block in chicago is one part school, one part store; a place where you can outfit your kitchen like julia child's and tap your inner french chef in a gourmet cooking class. >> it's very gratifying to make something delicious and have a family sit down and enjoy a meal. >> reporter: consumers like grauvogl keep the $300 billion global housewares industry
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cooking, and the hottest tools of the trade were on display recently at the home and housewares show. >> you can cut your chicken, and then you can flip it and cut your vegetables. with the venturi, it allows you to instantly aerate your wine with proprietary technology. >> reporter: before the recessions started, experts say the average american was eating out 205 times a year. last year, that number dropped to 195 times. so, presumably with more americans eating at home, there's more opportunity for the housewares industry. although americans are dining in more, they're actually entertaining less. but when they do, analyst harry balzer says they typically go all-out. >> it's about a monthly thing now; once a month, you'll have people over to the house. but when you do that, you want it to be a big occasion. you want to impress your friends. you want to make this a wonderful experience. >> reporter: le creuset is cashing in on that sentiment. it sells high end cookware. a five-piece place setting of stoneware runs $50.
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its most popular item, a five-quart cast-iron pot, costs five times that. >> when a woman or man is going out and spending $250, maybe they're giving up that pair of manolo blanicks, but they're investing in le crueset cookware. >> let's go here or let's go here. >> reporter: at the other extreme is maxwell and williams. the australian firm sells mix- and-match dinnerware for as little as five bucks a plate. >> if you had three dinner parties in three weeks with the same people, you could have three different dinnerware displays without spending a fortune. >> reporter: many celebrity chefs are using name recognition to sell products. curtis stone is selling bakeware lined with silicone that makes unpanning cakes seem effortless. >> the whole purpose of the brand is to try to bring confidence to people's kitchen and happiness to their dinner table. >> reporter: analysts say the hottest-selling wares are those that make cooking easier for the home chef or make them seem like one of the pros.
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diane eastabrook, "n.b.r.," chicago >> tom: the restaurant business model is pretty simple: buy ingredients, cook food and sell it hopefully at a higher price. but diners' tastes change quickly and competition is fierce. it can make it tough for even top chefs to find the right balance between creativity and profit. superstar chef michelle bernstein has won the top award for chef, written a cookbook and has been a regular on the tv show "top chef," but it's this small restaurant on the north side of miami that she calls home. >> my sister basically designed it with me in mind of a barbie house when we were, you know, kids of what i used to like.
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just made it fun and funky and frilly and not so serious, because david and i come from a world of very fine dining. >> reporter: david martinez is her husband and business partner. they broke many rules of the restaurant business when they opened michy's in 2006. it's small-- only 62 seats-- and it's location isn't exactly miami-glamorous. >> i would have never designed it like this had it been something the market wanted, because this was different. >> reporter: but the model has worked by concentrating on the menu while also paying attention to the bottom line. >> when you're building a business, you're not building a temple to yourself, if you will, because you'll fail immediately. you're building a business that you know will sustain itself and >> am i sick of cooking things like salmon and having tuna tartar on my menu? absolutely. do i want to braise another short rib in my life? absolutely not. but people want it and i can't take it off, so i cook for them, but i cook the way i want to cook for them.
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so this is a peach salad with vinaigrette to go with the pork belly. oh, good. it works. >> reporter: the menu is where the balance between food creativity, comfort and cashflow come together. while bernstein is a world- renowned chef, she's aware of how her cooking choices can impact the business. >> bone marrow has become somewhat more expensive, and i want to split those bone marrow, which is more expensive because i don't have one of the machines to split bones. so i asked my butcher to do it. but what i want to serve it with is stir-fried rice, which obviously is not an expensive dish whatsoever. >> i look at it as there's too many high-cost items on this menu and not enough... there's needs to be balance, obviously. you look at the heirloom tomato salad. it has baratta cheese, which is extremely expensive; it has heirloom tomatoes, which are a fortune; and baby argula, which is organic. so, for instance, that dish, where other restaurants would be making money on it, we're not necessarily doing so. >> reporter: the wine list plays a big role in any restaurant's business. it's a lot easier to control costs behind the bar than
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compared to the kitchen. but focusing exclusively on margins may not be the recipe for long-term success. >> if we were to put things on the menu that make us a bunch of money, a: who knows if people would continue to come? but more importantly, that's not why we're in this business. >> tom: after its first six years, david says michey's saw the number of people it served go down, but the people who ate there did spend more money-- about $68 per person. >> susie: as we mentioned, the restaurant business is one of the toughest in the world. more close than open every year, and on average the lifespan is a short two years. so, how does one family owned and operated restaurant
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in northern california keep expanding? tonight's "made in america" lands in oakland, california, where mike hegedus reports the secret is in the sauce. >> reporter: it is that all- american recipe for success: hard work, quality product, loyal customers and one special, secret ingredient. >> it's the sauce. it really is. >> my grandmother told me to never, never, never tell anyone the recipe for the sauce. and if i did, i'd be kicked out of the family! ( laughs ) >> reporter: if the sauce is the key, then what it has opened is the door to success for everett and jones, arguably the best- known barbecue restaurant chain in northern california. five outlets, with this-- the jack london square location in oakland-- the largest. it is owned and operated by dorothy king-jernegan and her children, four daughters and two sons. business acumen passed generation to generation. >> consistency, that's the key to having a successful business. >> knowing the history, i love it.
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>> reporter: it is a history that stretches back to a shoeless family in rural alabama; one that moved to oakland in the '50s; and one that saw dorothy everett, a single mother of eight, open her first restaurant with that sauce in 1973. it provided a good living and created a desire for something more. >> my mom said to me, "dorothy, they are not going to give a black woman that much money." >> reporter: but they did, and after a stint at the haas business school at u.c. berkeley, king-jernegan opened this location, one that includes a music venue and has played host to a string of sports and entertainment celebrities-- contacts and connections that are leading everett and jones to a southern california expansion.
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>> i'm also expanding to l.a. >> reporter: along with the bricks and mortar and researching opportunities for their ribs in retail, the everett and jones name is spreading across the u.s. the sauce is available in 300 stores, and, thanks to the internet, internationally. orders coming in from fresno to france, from roanoke to russia. it seems once they taste it, well... >> my mother always said that word of mouth was the best advertising. >> reporter: particularly when the words taste so good. mike hegedus, "n.b.r.," oakland. >> tom: finally, many of the nation's culinary school graduates are giving up on the traditional sit-down restaurant business and striking out on their own, on wheels. they're jumping into the food
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truck business. no other trend has parked itself at the forefront of the gourmet food craze quite like food trucks. we're not talking hot dogs. instead, think haute cuisine on paper plates. erika miller dishes on what's next for these meals on wheels. >> reporter: it's early in the morning and time to make the dough. after all the mixing and kneading is done, the waffle dough gets turned into another kind of dough. seven days a week, 14 hours a day, six wafels and dinges trucks sell their treats around new york city. it took four years, but the business is finally profitable. >> we do a lot of birthday parties, bar mitzvahs, corporate parties, all that stuff. that's actually a piece that you don't see, but it's a significant piece of the business. >> reporter: mobile food has grown in popularity the past few years. there are an estimated three million food trucks in the u.s. and an additional five million food carts. >> i think it's delicious. it's the first thing we ate when we got into new york city, and i have no regrets!
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>> this is great! it's like combining the best part of dinner and breakfast. you get pulled pork, coleslaw and a waffle. it's fantastic! >> reporter: food trucks can be more than a lucrative business. for some, they are also a way to try out a food concept before opening a bricks and mortar location. before he opened his seattle diner, chef josh henderson honed his menu through a fleet of food trucks. >> you are interacting with the guest that's right there. you hand them a burger and fries, and we see their reaction right there. >> reporter: that strategy also gave him time to build up a fanbase and establish his reputation as a chef. >> we had close to 8,000 fans on facebook and another 8,000 on twitter. so we were able to really open the doors to having a line, as opposed to if we had done it the other way around. >> reporter: wafels and dinges plans to open up its first retail location this fall. >> over here, you are going to have the waffles baked. then, over here, on this side, you are going to put the toppings on the waffles, the strawberries, the whipped cream,
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chocolate. over here, you are going to have the ice cream. >> reporter: and even though a store will have higher operating costs than a truck, degeest thinks its the right move. >> people want to sit down sometimes. i think it's going to be fantastic for people to come to the store and have a relaxing environment without the craziness of the streets of new york. >> reporter: if the cafe is successful, wafels and dinges hopes to open many more locations around the nation in the next few years. erika miller, "n.b.r.," new york. >> susie: that brings us to the end of the "n.b.r." special edition and our look at the foodie craze. happy july fourth. we hope you all have a fun and safe independence day. and tom, good luck with the grilling. >> tom: good night, susie and everyone. we'll see you online at and back here next time. "nightly business report" is brought to you by:
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captioning sponsored by wpbt captioned by media access group at wgbh >> join us anytime at: there, you'll find full episodes of the program, complete show transcripts and all the market stats. also follow us on our facebook page at bizrpt. and on twitter @bizrpt.
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